Yes, these companies charge a fee. I'm with you that I would prefer to hold my own money until a deal is reached. Like you said, I would be afraid that some of these companies would be scammers and just run with my cash. A fair amount of research would have to be done!

Joker, do you have to pay the company that is helping you to settle the debt? If so, I'd be afraid it might be a scam. Couldn't you do the same thing without using the middleman? Just hold onto the payment until you have enough to entice them to settle.

There is another problem with debt settlement and it is the fact that the IRS considers this taxable income. So even if you get the debt forgiven you will have to pay taxes on the amount forgiven. Isn't that a kick in the head? The IRS always finds a way to kick you when you are down.

I have had (in the past thankfully) a company approach me to get one of my debts settled. This is a negotiation by which the company you hire holds your payments or bulk payment until you go into default then they make a deal with the company holding the debt to settle for a lesser amount. Unfortunately, this type of action makes your credit rating go much lower but many companies prefer this to bankruptcy. Has anyone any experience with this?